Frydenberg says ARENA de-funding is a “transfer”, not a strip

The future of the Australian Renewable Energy Agency remains up in the air, with both the Coalition and the Labor Party fudging on commitments to funding for innovation of renewable energy technologies.

The Coalition is seeking to remove $1 billion in funds from ARENA as part of its omnibus budget repair package, and is calling on Labor to approve the move because that is what Labor brought to the table in its budget commitments in the election campaign.

Labor, having set up ARENA in 2012, is now trying to duck and weave on the issue, despite increased warnings that stripping ARENA of funds will kill R&D in Australia, and create a big “valley of death” that will force new technologies and start-up companies overseas.

Environment and energy minister Josh Frydenberg also fudged the issue on Thursday morning, claiming that the $1 billion in grant funding for ARENA had been transferred to the new Clean Energy Innovation Fund.

“It’s gone from being a grant program to a loan program,” he told ABC Radio National.

No, minister, it’s gone altogether. That’s why you need to pass legislation. The $1 billion for the CEIF is a transfer of existing funding from the Clean Energy Finance Corp. The $1 billion stripped from the ARENA budget, on the other hand, will simply disappear.

Labor’s environment spokesman Tony Burke hardly fared any better on ABC’s Lateline last night, claiming that Labor, while proposing to strip $1 billion from ARENA (apparently because it did not like the tenor of some NGO press releases) was planning to “reinvest” $300 million in to renewable energy.

“It’s also the case that the policy we took to the election did involve taking the savings from ARENA but at the same time, injecting $300 million into renewables,” Burke said, after conceding that renewables did have something to do with the environment.

He then tried to claim that the $300 million was an additional investment.

But that’s wrong too. Stripping $1 billion from ARENA leaves $300 million in the budget to be spent out to 2022 – which Labor planned to direct towards solar thermal and storage and community energy. In no way is it a “reinvestment”, nor is it “additional investment.

Such is the way of politics in Australia. Neither mainstream party says what it believes or believes what it says. And on live radio and television, might as well just make it up as you go along.

That’s why we end up in this terrible pickle. Meanwhile, Martijn Wilder, the chairman of ARENA, was defending the agency on radio, pointing out its contribution to not just the emissions reduction effort, but to the economy.

This was a theme picked up by ACT minister Simon Corbell on Wednesday when he said that the debate had been framed as an economic cost, when it should be seen as an economic opportunity.

Around the same time that Labor considers its position on the budget repair package that includes the ARENA funding, the ARENA board on Monday will consider the proposed grants of $100 million to 20 projects representing more than 750MW of capacity, in what could be its last major funding round.

The costs of solar have come down so much, Wilder noted, thanks in part to the ARENA tendering process, that new projects will only need grants representing 10 per cent of the project cost, rather than 50 per cent previously.

Insiders suggest that means that more than half of the 20 shortlisted projects will get some sort of funding, either by number, or by capacity.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

11 Comments

Matthew Wright 3 years ago

ARENA needs to stay but needs to fund more innovations such as wind farms using Enercon’s new E-141-4MW wind turbine with a 159m hub height and 141m rotor diameter. It makes the current breed of wind turbines installed in Australia look like the 20-50m hub height 1980s ones from Altamont pass.

Matthew Wright 3 years ago

Furthermore the Small Scale Certificates should now be based on efficiency, to help improve the solar photovoltaic industry. Each year for the next 6 years the minimum efficiency panel (module) that should be allowed to be sold and achieve the SRES should be lifted. Starting at 17% in 2016, 18% 2017, 19% 2018, 20% 2019, 21% 2020, 22% 2021, 23% 2022, 24% 2023 then hold and reassess based on available technology. The 24% tech is equivalent to Sunpower’s 372W mono-crystalline panel which is soon to be released.

barso 3 years ago

Why should we do that? So we don’t run out of space for modules?

Matthew Wright 3 years ago

Many reasons, space is one reasons if we’re going to achieve a high penetration of rooftop PV ie 30-50% of our annual energy then we need the highest efficiency on roofs. The improving mandated panel efficiency also drives labour efficiency per unit produced, technology development, only the more innovative companies get rewarded and resource and energy – higher efficiency panels have faster energy payback times and are more likely to use new processes that have even faster payback times again.

Peter Campbell 3 years ago

If you have limited roof space you might want to have the panel that is most efficient in W/m2 but if you have plenty of space you might want the panel that is most efficient in terms of W/$. Why pay a premium for super efficient panels when you could get more output for fewer dollars and just take up a little more space?

Matthew Wright 3 years ago

In that case why subsidise solar at all (subsidy effectively now running at 40%) If we want to run the country on renewables then we’re going to need technology advances. What I propose above is a moderate lever. Not forcing everyone to pay 60% more today for a 330W sunpower panel but eliminating the bottom end panels. Jinko Trina – commodity priced panels are already at 16-18% so its effect would be very marginal. My understanding is we support solar to help it down the cost curve so that it is competitive with carbon emitting fuels. This small change will be leveraging each dollar to achieve that goal sooner. And the resource of rooftops commercial and domestic is finite. So yes we (Australia) are space constrained.

Peter Campbell 3 years ago

subsidy or competition or whatever. All push panels to be more efficient in either W/$ (improve the manufacturing process to make an ordinary quality panel more cheaply) or W/m2 (find a way to increase the output of a panel of a fixed area). Either or a combination of the two are worthwhile, not just the second one.

Matthew Wright 3 years ago

Disagree – as a general rule the efficiency gains are with reduced energy inputs into the panels and that comes about through same material higher conversion efficiency and most importantly balance costs. You have to mount the panels and mounting 125W versus 250 versus 375w per 1.6sqm at each stage is a paradigm shift.

Miles Harding 3 years ago

Efficiency is good, but for the most part, cost is more important. Maybe we should read this as an attempt to nobble the solar industry.

Matthew Wright 3 years ago

From me haha you’ve got to be kidding. I’ve been promoting solar for the last 17 years. And was one of the first people with a rooftop solar system in Victoria. in any case the industry is trending towards 25% efficiency over the next 12 years if the past 12 years are anything to go by where it will roughly converge with Sunpower. There is nothing nobbling the industry about this.

Miles Harding 3 years ago

More LNP spin and deception. It seems necessary to restate everything they say into terms that reflect the intent and effect.

I suspect this sort of ‘creative’ use of language is one of the big reasons that the LNP is wearing thin on the electorate.